Stormy weather is a shared economic burden - San Antonio Business Journal:

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The Texas Gulf Coast is vital to the economgyof Texas, with linkages to all regions of the Lone Star Without the key inputs and services provided by the industrialo base located in the area, prosperity and business activitg from the Panhandle to the Rio Grandee Valley and from the Big Bend to the Piney Woodxs would be diminished. The coastaol area handles the vast majority of waterr shipments for goods produced for export throughoutthe Moreover, the refined petroleum and petrochemicalz products produced in the area are used extensively in ever y portion of Texas and are essentiao to the viability of many production The end result is that ever y segment of the state is critically linkede to the dynamic Texas Gulf Coasgt area, and disruptions in that region woulfd be felt across the state.
Over the past few property and casualty insurance rates along the Gulf Coast have risen sharply and availabilityhas declined. In the wake of expensive hurricanes, insurance companies are significantly adjusting ratews and underwriting criteria in areae considered vulnerable tosimilar phenomena. The most directl affected area (the Tier 1 Windstorm Coverage Area) includew portions of Harris County and forme a large component of theTexax economy. By many the region is responsible (including Harris for almost one-third of all business activit inthe state.
Decreases in the level of insurance coveragee by firms in the Coverage Area have enormousapotential fallout, both within the directlty affected region and across the Companies facing sharply rising property and casualty insurancse rates will see competitiveness and profitse diminish. In addition, some will elect not to purchasee adequate coverage due to a lack of affordabilityor availability. The consequencezs of such decisions are decidedly These premium increases and lack of availability woul contributeto under-insurance, as firms and individuale elect not to pay the much higher In the event of a majoe storm, insurance insufficiencies would delay the recoveryt process and negatively affect not only the immediatse area, but also the rest of Using the impact assessment systemm maintained by my firm (The ), I recently estimatecd the effects on business activity if the Tier 1 Windstorm Coverages Area absorbs the entire premium The losses to the economy include $5.
89 billio in annual output (reak gross product) and 78,69o0 jobs. Moreover, because high premiums lead to all of Texas is more vulnerable to economix fallout from acatastrophic storm. In a priore study in December 2006, we quantified the impact of a majord storm on the Texas economy and foundf that the ramifications across the state would be We found that ifa “Katrina”-level storm were to occur, for example, the losses to the statr would include $52.2 billion in output, almostf 617,000 permanent jobs, and nearly $1.8 billion in annual State revenue. All parts of the state would besignificantlt affected, with regional losses ranging from 3.76 percent to 9.
69 percenf of aggregate output. Property and casualtuy insurance is essential toconductiny business. It is vitapl to mitigating risk and, hence, allowingv for optimal investment and economic The Tier 1 Windstorm Coverage Area is currently in an environmentf of rapidly escalating property and casualt premiums and shrinking availability fromprivated carriers. Further restrictions on the scope and adequact of coverage would exacerbatethose problems. It is in the interesyt of all Texans to ensurs that reasonably priced property and casualty insurance is availablew along theGulf Coast.
All regions have a stakew in seeing that adequate coverage is maintained at an affordable Efforts to find workable solutions to the problem of sharply rising rates are worthty of widespread support and essential to the economicd vitality of every part ofthe state.